Food Higher Again as Inflation Continues Climb in June

The price of food continued to tick higher as the Canadian inflation rate was near a four-decade peak in June. 

Statistics Canada’s consumer price index, the primary measure of Canadian inflation, was up 8.1% last month. That topped the 7.7% gain in May and was the highest year-over-year increase since January 1983. 

The price of food climbed 8.8% in June compared to a year earlier, with prices for food purchased from grocery stores (+9.4%) rising more steeply than food purchased from restaurants (+7%). From May, the price of food was up 0.1%. 

The price of bakery and cereal products was up nearly 1% in June from a month earlier, while year-over-year prices were 11.2% higher. Meat prices saw some moderation from May, easing 0.2%, but were still up almost 8% compared to the previous year. Fresh fruit and vegetable prices also saw some softening from last month but remained up 9.8% year-over-year. 

The overall acceleration in the June inflation rate was mainly due to higher prices for gasoline. However, price increases remained broad-based, with seven of eight major inflation components, including food, shelter, and transportation, rising by 3% or more. 

On a year-over-year basis, consumers paid 54.6% more for gasoline in June following a 48% increase in May, contributing the most to headline consumer inflation. Prices at the pump rose 6.2% month over month in June, following a 12% increase in May.  

Gas prices largely followed crude oil prices, which peaked in the first week of June with higher global demand amid the easing of COVID-19 public health restrictions in China, the largest importer of crude oil. Crude oil prices eased in the remaining weeks of June amid slowing demand worldwide related to concerns of a global economic slowdown. 

Although still hefty, Canada’s June inflation rate lagged that of the US and the UK. Inflation in the UK hit 9.4% in June, while US inflation came in at 9.1% for the month.